Crowdlending platforms, also known as P2P lending platforms or interpersonal loans, are a form of crowdfunding that uses new technologies to offer to finance to people or companies where the capital of these loans does not come from crowdlending companies but from investors. Individuals who want to be part of the different projects in exchange for an agreed return, the interest that the borrowers will pay for the financing.
These crowdlending platforms analyze loan applications and grant their applicants a level of risk according to their economic profile and the purpose for which they need the capital. This level of risk will serve to allocate the interest they will pay for this loan (the higher the risk, the more interest we will pay) and so that investors can know what type of project they will invest in, their risk and the profitability that they will obtain. Through intermediation and its services such as risk analysis, loan collection and distribution among different investors, crowdlending platforms will charge both investors and borrowers a management fee.
Characteristics of P2P loans
The characteristics of P2P loans are quite similar to that of bank loans. This type of loans between people usually grant amounts from 3,000 euros and up to 60,000 euros for any purpose, with a repayment term of between 6 months and several years (depending on the amount that we request), they do not have linked products to be able to access the credits and they do not require a change of bank, although they will have a management fee (which ranges between 1% and 5%). Your interest rate will vary depending on the level of risk that the entity has assigned us according to the credit analysis. In general, the application process is very fast, since it is done completely online. The concession will depend on the investors who participate and the capital they decide to contribute, although it usually lasts around two weeks.
To be able to access Payday! loans as individuals, we must be of legal age, with a regular and sufficient income that allows us to face the credit reimbursement and present a proof of the purpose. In order to obtain P2P loans, being legal persons, we must have a company with a minimum of three or five years’ seniority, with a minimum turnover that will decide each platform and be registered in Spain.
Who can invest in crowdlending platforms
Any person of legal age and resident in Spain can become an investor in a crowdlending platform that operates in our country. To do so, we simply have to register in the crowdlending platform (s) we want and open an account associated with the platform in order to transfer the funds to the different projects.
Once registered simply we must choose between the different projects that we like according to their level of risk, the purpose, the term in which they will return the loan or the profitability that they will provide us. Usually, every month, coinciding with the payment of the monthly payment of the borrowers, they will give us a part of the capital invested with the proportional part of the benefits.
The maximum amount that we can invest is limited by law. This limit was set as an additional measure to protect non-professional investors who would like to invest in these crowdlending platforms. This limit for non-accredited investors will be up to 3,000 euros per project and up to 10,000 euros per year as a whole in all investments in all crowdlending companies. In addition, when investing in each project, we should read a fact sheet explaining the operation of P2P loans and their risks to prove that we have been informed.
Types of crowdfunding platforms that exist in Spain
Crowdfunding means, for its acronym in English, massive collection of funds ( crowd = crowd, funding = financing). New technologies have allowed a large number of people who do not know each other to be in contact for projects that both are interested in. There are currently four types of crowdfunding, which are differentiated by the way in which money is collected (it is an investment, a loan, a donation …) and what investors receive in return:
Crowdlending or p2p loans: as we have already explained, crowdlending platforms allow individuals and companies to obtain the financing they seek, while investors participating in each project will receive a fixed return on the money contributed. Said profitability will be fixed in advance and will be the interest paid by the persons requesting the loan. The higher the risk profile assigned by the platform, the higher the interest will be.
Crowdequity or crowdfunding of shares: it is a way for companies and entrepreneurs to get financing without borrowing. These platforms do not grant loans but capital in the form of shares. Thus, the company that seeks capital achieves it thanks to the investors who participate and the investors, in return they will receive a share in the said company. The value of the participants will depend directly on how well or well the business project evolves.
Crowdfunding of donations: this is a way of raising funds for a project, usually in solidarity. In this case, the fundraising has no other purpose than to help the people who request it and the investor will not receive any kind of physical retribution. For example, a crowdfunding to help the victims of a natural disaster.
Crowdfunding of rewards: it is a form of fundraising that is used mostly among self-employed and small entrepreneurs to finance their business project. In this case, in exchange for their participation, investors will receive a reward related to the project itself. For example, the disc of the project to be able to record it or a book of the person who wanted to self-publish.
Although all belong to the same type of collaborative economy, crowdfunding, each type of platform will have its own characteristics according to the type of projects for which funds are being raised and the kind of compensation that investors expect in exchange for such participation.